Sir I am 34 years old and my salary is around 120000/p.m. I have SIP as under tortalling 30000/-p.m Aditya Birla Sun Life Small Cap fund Hdfc Balanced advantage fund Kotak emerging Equity fund HSBC value fund ICICI value discovery fubd Franklin Templeton smaller companies fund Hdfc flexi cap fund Bank of India flexi cap fund ICICI multi asset fund Nippon India consumption fund Besides above I also have PPF account for over a period of 15 years. I have been blessed with a son who is now 2 years,and I have opened ppf account for him also last year. Besides I have lic policies for which premium is around 2 lacs par annum. I have a mediclaim policy of 10 lacs covering my wife. Please advise my investments are correct or any change is required.

Ans: You have made a good start. Your discipline in SIPs, insurance, and long-term products like PPF shows a strong financial mindset. However, there are some areas that need improvement. As a Certified Financial Planner, I will give you a 360-degree view and provide practical suggestions.

Income and Savings Capacity
– Your monthly salary is Rs. 1.2 lakhs.
– SIP contribution is Rs. 30,000 per month.
– LIC premium is Rs. 2 lakhs annually, or about Rs. 16,600 monthly.
– This totals around Rs. 46,600 monthly in investments.
– That’s a good saving rate of around 38% of your income.

Appreciate your consistent savings behaviour. It’s a great habit.

SIP Portfolio Structure
Your SIP is spread across the following funds:

– Aditya Birla Sun Life Small Cap Fund
– HDFC Balanced Advantage Fund
– Kotak Emerging Equity Fund
– HSBC Value Fund
– ICICI Value Discovery Fund
– Franklin Templeton Smaller Companies Fund
– HDFC Flexi Cap Fund
– Bank of India Flexi Cap Fund
– ICICI Multi Asset Fund
– Nippon India Consumption Fund

That’s a total of 10 funds, which is excessive.

Key Issues in This Portfolio:
– Too many funds lead to duplication.
– Small caps are overexposed with two small cap funds.
– You also have two value funds. Value strategy needs patience.
– Multiple flexi-cap funds dilute the advantage of flexibility.
– Balanced Advantage and Multi Asset fund may overlap.
– Sectoral fund (consumption) increases risk.

Suggested Course of Action:
– Limit total funds to 4 or 5 only.
– Choose a mix of large & mid-cap, flexi-cap, balanced, and small cap.
– Maintain one value fund at most.
– Avoid sectoral or theme-based funds. They are risky.
– Don’t select funds based on past returns. Focus on consistency and management.
– Consider reviewing with a CFP-backed MFD regularly for course correction.

Index Funds Not Suitable
Though you haven’t included index funds, it’s important to mention:

– Index funds mimic the index and cannot outperform.
– No downside protection in volatile markets.
– Actively managed funds give better risk-adjusted returns in India.
– A qualified fund manager adapts better to changing market cycles.

Stick with quality active funds through a trusted MFD backed by a CFP.

Direct Mutual Funds – Avoid
You haven’t mentioned if SIPs are direct or regular. If they are direct:

– There is no guidance or monitoring from a professional.
– You may not exit or rebalance at the right time.
– You lose behavioural support during market crashes.
– Direct option looks cheap but costs more due to wrong decisions.

Better to invest through regular plans via an MFD who is also a CFP.

LIC Policies – Need Serious Review
Your LIC premium is Rs. 2 lakhs per annum. That’s significant.

– LIC plans are generally low return.
– Most policies give 4–5% returns only.
– They are neither pure insurance nor good investments.
– This blocks liquidity and opportunity for growth.

Action Needed:
– Do a detailed policy analysis.
– If policies are endowment or money-back plans, plan to surrender.
– Reinvest the surrender value in long-term mutual funds.
– Keep insurance and investment separate.

Your age is ideal to correct this early misstep.

PPF Contributions – Good Move
You have a PPF for yourself and one for your son.

– This is good for debt diversification.
– Gives tax-free maturity.
– Provides stability to the portfolio.
– Continue yearly contributions, especially to son’s account.

Suggestions:
– Ensure the yearly limit of Rs. 1.5 lakh is not breached combining both accounts.
– Use PPF for future education or wedding needs.
– Don’t touch it midway. Let it compound fully.

Health Insurance – Needs Upgrade
You have a mediclaim policy of Rs. 10 lakhs for your wife.

Immediate Concerns:
– What about your own coverage? You haven’t mentioned.
– Rs. 10 lakh may be insufficient as healthcare inflation is high.
– At least Rs. 20–25 lakh family floater is needed.

Suggested Actions:
– Buy a floater policy for yourself, wife and son.
– Add a super top-up of Rs. 25–30 lakhs.
– Always disclose existing illnesses while buying.
– Consider adding critical illness cover separately.

Child’s Future – Structured Planning Needed
Your son is 2 years old. You have started PPF for him. That’s thoughtful.

But:

– PPF alone may not meet rising education costs.
– You need to start a dedicated SIP towards his education.
– Add a SIP with a horizon of 15–18 years.
– As the goal is long-term, start with aggressive equity exposure.
– Slowly reduce equity as goal comes closer.

Emergency Fund – Not Mentioned
You haven’t mentioned your emergency fund.

– You must keep 6 to 9 months of expenses in liquid form.
– FD, liquid mutual funds or sweep-in savings are suitable.
– Never invest emergency funds in equity or long lock-in products.

Suggested Step:
– Immediately build a Rs. 2–3 lakh emergency corpus if not already done.

Life Insurance – Missing Term Plan
You only have LIC traditional plans. They are not pure protection plans.

– Buy a term insurance of at least Rs. 1 crore.
– Use online comparison platforms but choose established insurers.
– Coverage should continue till age 60 or retirement.
– Only term plans provide value-for-money coverage.

Tax Planning – Moderate Scope
You are already using:

– PPF for Sec 80C
– LIC premiums for 80C
– Health policy for Sec 80D

Suggestions:
– Avoid buying products only for tax saving.
– Mutual fund ELSS can be added if tax saving under 80C is incomplete.
– Don’t mix tax saving with goal-based investments.

Investment Objectives – Align with Goals
You are investing in multiple funds. But are they aligned with goals?

Suggested goal-based buckets:

– Retirement Planning: Use a mix of equity and hybrid funds.
– Child’s Education: High equity now; reduce as goal nears.
– Home or Other Goals: If within 5 years, avoid equity.
– Contingency & Health: Use low-risk instruments only.

Every investment should have a purpose. Random investments lead to confusion and underperformance.

Monitoring and Rebalancing – Very Essential
– Review portfolio at least once a year.
– Check for fund underperformance.
– Exit non-performers with professional help.
– Rebalance between equity and debt every year.
– Don’t stay invested blindly in the same fund for years.

Role of Certified Financial Planner
A Certified Financial Planner (CFP) offers:

– Structured investment plans
– Behavioural discipline support
– Periodic rebalancing
– Goal-based tracking
– Insurance analysis
– Tax and legacy planning

Investing without a professional is like sailing without a compass. Avoid mistakes and missed opportunities.

Final Insights
– You have a solid savings habit.
– But your investment mix is too scattered.
– LIC policies are locking capital with poor returns.
– Medical and term insurance needs fixing.
– Emergency and goal-specific planning is needed.
– Too many funds dilute returns and increase confusion.
– Invest through a CFP-led MFD. Avoid direct and sectoral funds.

Make your investments goal-driven, not product-driven.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment